Apple agreed Wednesday to return most of its overseas profits to the United States and pay a onetime $38 billion tax on the earnings, as well as create new U.S.-based jobs and issue bonuses to its employees. Company spokespersons attributed the move to the White House’s enactment of a $1.5 trillion tax cut in December.
The tax legislation included revision of a longstanding policy that had allowed companies to avoid paying U.S. income taxes on profits they had accrued overseas until they returned the income to the United States.
U.S. businesses consequently stashed an estimated $3.1 trillion in earnings offshore. Apple alone had $246 billion in overseas accounts as of last year.
Companies repatriating funds would have had to pay a 35% tax on the funds under the old tax laws. The new tax law reduces the tax owed to only 15.5%.
Apple did not specify publicly how much money it is returning to U.S. accounts, but the $38 billion sum suggests a repatriation worth $245 billion—almost all of its overseas cash reserves. The company also announced that it will spend $30 billion more in-country over the next five years to create 20,000 new jobs and that it is issuing stock-based bonuses of $2,500 each to almost all of its employees worldwide.
President Trump hailed Apple’s announcement later that day, tweeting that it is a “huge win for American workers and the USA!” He added: “I promised my policies would allow companies like Apple to bring massive amounts of money back to the United States.”
Apple has faced criticism inside and outside the United States for its use of offshore accounts and other mechanisms to avoid paying taxes. In December, the Irish government started collection efforts to force Apple to pay $15 billion in taxes that the European Union ruled Apple owed.